Trust and Policy Capacity - Strategic Bureaucrat Appointments under Electoral Incentives

Dana Sisak and Otto Swank
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Dana Sisak: Erasmus University Rotterdam
Otto Swank: Erasmus University Rotterdam

No 25-062/VII, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: We investigate the determinants of states' policy capacity, defined as the ability of states to craft effective policies. Our model shows that the interaction between politicians' implementation decisions and bureaucrats' motivation to design effective policies can lead to the coexistence of high-trust and low-trust equilibria. Without electoral concerns, politicians favor high-trust equilibria and hire capable bureaucrats. In a polarized society, electoral concerns may prompt more policy-skeptical politicians to appoint less capable bureaucrats to diminish policy capacity and ensure low-trust equilibria. This strategy shifts future implementation decisions in favor of interventionist politicians. Moreover, it reduces voters' demand for interventionist decision-making.

Keywords: infinite horizon optimal control; monotone trajectories (search for similar items in EconPapers)
JEL-codes: D72 D73 D78 (search for similar items in EconPapers)
Date: 2025-10-24
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